Cara's Commentary & Community Chat, Wednesday, Jun 10, 2009

Thanks, Ron. That pretty much sums it up. Sitting on the sidelines was good advice.

Patience in the market resembles discretion on the street. Rules in a knife fight=knife rules, so stay out if you're not committed. Improvising with a broken glass bottle has become impossible with the advent of the return deposit- good luck finding one amidst the aluminum and plastic.

Bill,

While your following comment is certainly fitting for those who come here daily, I'm afraid this is not so with the vast majority.

"The TARP has been a real eye-opener for Americans."

As I wrote in response to the George Carlin transcript of "The Club" — we are far too involved with daily problems and trivia to effect any real revolt or change to this well planned and executed controlling force.

As for the conclusion —

"I feel HB&B will take many years to recover from their loss of reputation and business that will come from this."

— they will have their (our) money to keep them warm. And then pull the next scam. Memories are short in America.

Bev- No worries- we all love you for your mind ;)

Aaaaaaaaaaahhhhhh! My morning laugh from 2nd. Thank you!

Cutting my losses - letting a more substantial trade in WNR do its thing.

Wrote some puts on KGC and SLW following recent weakness in POG. Cashing in "IF the price is right!" (u had that gameshow in the US?).

PAL is holding. Looking to add on dips.

That was quite a video Bev.

I think that guy is Cramers worst nightmare. They should get him a slot on Fox business t.v. or something!

Well he said it all... WOW and we are worried about folks from other lands! I had to pause it and freshen up my coffee and re start...

Gap and run, sucking in more victims for next week's options expiration.

Hi All,

I have just connected a DSL service at my temporary place in Russia, and now I can watch the market at the very unusual time for me -- before it opens! Unfortunately, I won't be able to observe the most important hour -- the final hour... In any case, I have just bought some more UNG at $14.24, following Bill's observation about oil moving into 70's implying that UNG cannot be far behind. In the current overbought market UNG is the only item on my radar that is not overbought. So if we are now at the beginning of a new huge move up in commodities, then UNG should perform very well starting from these levels near its all time lows (many other commodity stocks have doubled or tripled since their lows).

Agreed David, but US natgas is particular in that it is a local market and storage is rapidly filling, with now where to stock the stuff afterwards. Some of those banks might have made out with filling tankers full of oil, to sell off into present prices, but if the US doesn't actually consume Natgas in sufficient quantities, as someone here pointed out, they'll have to give the stuff away.

Nonetheless, a good spike in prices is certainly a possibility.

edit: I'd perhaps wait until tomorrow. Further news of overproduction is likely to create a fairly vicious spike downwards tomorrow, which might be advantageous as an entry point.

Sorry... I lumped everything under foul language....

He also mentioned being in the eye of a hurricane, must be one big hurricane with a matching eye.

http://www.contracostatimes.com/localnews/ci_12547...

Some local news about the ramifications of disastrously incompetent government.

2nd, what time is that report due in, in relation to EST?

No need to apologize, Bev. Thanks for the link.

ChrisM

Thanks for the info... I will go back into the archives and pull up the discussion.

technicals vs. fundamental hey? Indeed, I did see a chart showing huge reflation in natgas during an earlier recession (90's, 80's?) - a very impressive chart. If there is a bubble in energy, I'll ride that train until it pulverises its passengers.

Better yet Bev, straight from the horses mouth.

http://watch.bnn.ca/trading-day/june-2009/trading-...

David,
You may want to read yesterday's EIA Short-Term Energy Outlook. They aren't usually good at forecasting price, but there is considerable good info in this report on oil, natgas, coal.
http://www.eia.doe.gov/emeu/steo/pub/contents.html

at 39.60 after reading the following comment from Hussman: "Delinquency rates on commercial, credit card, and real-estate loans are soaring well above last year's levels, so my impression is that immediate fears about inflation will be replaced by a fresh flight to safety within a few months." The loss of the upward momentum in the short-term XLF chart after a huge medium-term move up also makes me feel like this is a low risk purchase.

After all those charts you pump out for us - least I could do. I found Yamada by scrolling through the video segments, bottom right hand of screen.

Question for everyone:

One the subject of Maxpain for SPY. Checked in to see that maxpain is now $86 for SPY in Jun. Checked in on yahoo and the volume for an $86 put is many times the number for other calls and puts.

What does this tell us? That every man and his dog is playing maxpain, or are the pros homing in on this number?

I wonder, who might be buying dollars in anticipation of the possibly successful treasury auction this afternoon?

PM sold off hard this morning at the same time, but oil (as has I have observed recently) got off lightly.

Still, impressive volume for GLD. And it looks to have pretty good support whenever the selling pressure eases.

David--Agree with wedge prediction, I'll wait until down trend from May 13th @
17.55 is broken to upside and using rising lower trendline as support. Coming to apex so we should have a breakout soon, one way or another.

RIMM - numbers raised at Goldman to $96. Estimates also increased, to reflect positive channel checks. Buy rating.

Nice little pop there, can it gain some traction? These press announcements always provide a pop which never seems to catch on for long... still loosing money I guess, even with natgas in the gutter.

CP- Interesting to see CHK so strong today, no?

According to the CBC, there is a discrepancy between the amount of gold and silver the Royal Canadian Mint's records say it has and what's actually there. The Mint's spokesperson says the discrepancy could be anything from a heist to sloppy record-keeping. Well, at least they've got the possibilities narrowed down.

CP,

You are much more sanguine than I. When did we last have a decent economic leadership in place? What has changed since Bush left office? Are you aware how much Haliburton benefited during the Bush administration? The mercenaries pay vs our troops?

Does it matter to those in the control group whether the money comes from military or banks?

We (anyone who lost big bucks during the past year) were the ones caught with our pants down. The elite crew running Wall St. US treasury & Co. did very well and still are. They throw an occasional sacrificial lamb into the fire — Madeoff, Lehman — but Paulson, Geithner, Rubin, Franks and too many more to mention are doing the same as their predecessors.

We've had a lot of economic hardship here in Illinois for over a decade and the only thing which has changed is our Congressman now says he's "concerned about job losses to foreign countries" (formerly a big booster of off-shoring) and wants to give us $5000 to buy a new car.

Sure, people are bitching and moaning about prices, about lost savings, about house prices, but look how long Social Security has been ignored, look how many are without health care and willing to let Obama continue with his impossible promises.

Soccer Mom's aren't all that scary. (And they are too busy to do anything about it).

Our unemployment has recently dropped. The drop is due to people who have been able to sell or walk away from the house going elsewhere to look for work.

If you missed the George Carlin bit yesterday about The Club, check it out.

This is and has been the reality for a looooonnng time and is likely to continue, IMO.

I think they'll support the buck and pound PM right up until the auction goes off. In the past few weeks, gold spiked prior to one of these long treasury auctions, and I don't think they want that to become a pattern.

But look at TBT - the actual bond market seems to be a market they can't control quite as effectively.

David,

"I have just connected a DSL service at my temporary place in Russia,"

I contacted AT&T for the umteenth time yesterday and it is still not available here (Illinois, USA). Where the hell is Alexander Bell when we need him?

We're dying a slooow death. The alternative phone company I had is now defunct.

Mark - I kinda thought there'd be a bounce there, just got in a wee bit early ($23.50) so my gain ain't quite there yet. Hopefully I'll make some coin before the day ends, need to raise more cash before the anticipated broad sell off.

How much longer can this bloated balloon we're in keep blasting sideways before bursting upon the thorny blossom of options expiration week? The max-pain on SPY says: Danger.., Will Robinson!

Waiting on the corrective action, trying to exit Billy Ball style with pride in tact... ;)

"I contacted AT&T for the umteenth time yesterday and it is still not available here (Illinois, USA). Where the hell is Alexander Bell when we need him?"

Yes, we can!

Looking at CHK, I think it's late-to-the game folks excited about $NATGAS. I'm no prophet and could be dead wrong, but I know the time to be interested in CHK was back in January and February when indicators were rising from deep oversold conditions.

I'd be getting more excited about war-gaming a short of CHK at this stage in its run, but either way I'd certainly be pulling profits off the table and into our pants pockets.

CP - max pain for SPY indicates a 12% drop but the max pain for QQQQ is more sideways action. Does that mean the big guys rollover, but the smaller cap and tech hold up?

Looking for an entry into commodities.

tlt getting hammered the last few days and gold is down.
gold stocks are down even more.

tell me again why the goldies are cheering failing bond auctions when it doesnt seem to be helping gold.

not liking the action at all here, especially in my freshly bought positions from a few days ago.

im back to half out and half in,

It sounded like China wanted to over the past few months, but now it seems that Russia will be the first to move. From bloomberg: "Treasuries Decline as Russia May Pare Holdings of U.S. Debt "

http://www.bloomberg.com/apps/news?pid=20601087&si...

And to top all of that off, the US exports have dropped: "U.S. Economy: Trade Gap Grows as Exports Drop to Three-Year Low"

http://www.bloomberg.com/apps/news?pid=20601087&si...

where can i see the carlin bit?

Agree on Kirk's site. Good info and various viewpoints. Worth the money.

Grym - Yes, Carlin had it pegged, for sure. If everything goes to heck we'll know who to blame?

Stretch out your palm for a generous helping of balm. Now does it feel like they're borrowing from your children and children's children to bribe you into submission, or are they simply taking money from your right pocket to place in your left pocket?

It's all a shell game, keep your eye on the shell with the prize.

Why would a drop in exports, weakness in US treasuries, weakness in US muni/corp bonds 'cause' or coincide with a stronger dollar? Why would people/countries be buying dollars?

The only theory I can think of is that we are still enjoying the world wide US tax on commodities(because they are priced only in USD). And with signs that the world economy may be turning around, there is an uptick in buying.

Salty

It is true... there is no dumb question. ASK! Someone will answer and that starts the learning curve.

out of scenarios we discussed yesterday, one of the most unpleasant takes place:

SQNM: Caris commenting on stock activity, does not see reason for strength after speaking with the company

"this habit has been the hardest to overcome"

Agreed. Good Luck with that Vadym.

Interesting... While I feel something has to be done about executive pay, I'm not sure this is ideal...

Breaking News Alert
The New York Times
Wednesday, June 10, 2009 -- 11:41 AM ET
-----

White House Appoints Czar to Oversee Executive Pay

The Obama administration appointed Kenneth R. Feinberg to the new post, giving him broad discretion to set pay for 175 top executives at seven of the nation's largest companies.

starting a 1/4 position with intentions of buying more on dips. Bills logic works for me on this one too. I got whipsawed on my last UNG trade and plan to be more patient with this go around. Starting with smaller more comfortable position.

Van Tharp's Book (chapter 9 or 10 I think) goes into all kinds of ATR stops and position sizing.

IIRC, he suggests a 2 ATR stop for a day and a three ATR stop overall. I was in an investment club and we had an ATR stop for Sun Microsystem (the club bought it at 9 and sold at 100)...

Three people quit the club when we sold SUNW (the one-decision stock)...

Stockcharts.com has ATR indicator available for free.

As for the best bargain in the blogosphere, you're reading it today (Bill's site)...

Best,

Ron

From the EIA:
Total U.S. marketed natural gas production is expected to decline by 1.1 percent in 2009 and by 2.6 percent in 2010. Low natural gas prices brought about by the current economic slump have had a dramatic impact on recent drilling activity. According to Baker Hughes, total working natural gas rigs are now down 56 percent from the September 2008 peak. Although a corresponding decline in production has yet to appear in data through March 2009, total U.S. marketed production is expected to drop by nearly 5 billion cubic feet (Bcf) per day between the first and fourth quarters of 2009.

U.S. liquefied natural gas (LNG) imports are expected to increase to about 495 Bcf in 2009, from 352 Bcf in 2008, due to weakness in demand for LNG in the global market. The severe economic contractions in the LNG-consuming countries of Asia have increased the amount of available LNG in the global market,
------------
This seems bullish to me. Production is decreasing and is not reflected in data though March 2009......Rig count is down....imports of LNG are up.

The low prices and increase in imports (global demand has fallen) are effecting small E&P companies and a few have gone bankrupt or are close to going bankrupt. As these small producer go out of business this will cause U.S. production to decrease more than expected. When global demand picks up this will reduce the flow of imported LNG. The U.S. producers will not be pick up the slack when this happens as producers have been shutting down wells, going out of business, and not drilling new wells.

And is currently trading @ $1.7x, might be some opportunity there?

No position, DYODD

Edit: In @ $1.71

Didn't Bill say something recently about watching out for the rise in the 10-year as it approaches 4.00% that companies will have difficulty meeting earnings? I can't remember - Does anyone remember the point he was making. I'm like a deer caught in the headlights - I want to sell some of my winners and some of my losers to reduce risk but literally can't push the sell button. I can just see it - I'm going to lose all of my gains again and say would've could've should've - Uggh

Ok big guy I'm out for now with a small profit.

...

Search the site for "bsi87" he explained about max pain more than anybody. His explanations may be on the old archives though.

Lundin Mining has been on a tear since February after a failed merger with HudBay minerals, it delisted itself from AMEX stock exchange, and then the CEO bought 1 million shares almost at its 52 week low. Volume dropped off significantly after they delisted themselves. They claim that it would save them money. Anyway after that move it has risen from its 52 week low of .70 cents to $2.8 in a nice upward channel. One year ago it was a $10 dollar stock.

They mine basic metals like copper, zinc, nickel.

Mackinaw - ADM - Everything I see gives a thumbs-up except for the options calculator, which gives a finger of disapproval.

Yes, but this is not the case of a stock rising for unknown reason anymore.

Yesterday's headline:
Tuesday, June 09, 2009 1:39:39 PM
Sequenom, Inc Strength attributed to chatter that SQNM may be close to resolving issues of mishandled data for SEQureDx Trisomy 21 Test
- reminder: on 4/29 the stock fell over 75% on a report it would delay the launch of its SEQureDx Down syndrome test, due to the discovery by company officials of employee 'mishandling' of R&D test data and results. At that time the company said it is no longer relying on the previously announced R&D test data and results, and would launch the Down syndrome test upon publication in a peer-reviewed journal of the results from the on-going large, independent clinical studies, which are designed to be practice-changing for Down syndrome testing, and anticipate a launch in Q3 2009.

As you see, it outlined the problem that led to a stock drop in the past and the specualtion that leads to the rise now.

Today's headline:
Wednesday, June 10, 2009 9:30:19 AM
Sequenom, Inc Hearing Caris commenting on stock activity, does not see reason for strength.

As you see, it says "we talked to the company, yesterday's speculation is not confirmed so far".

This is a game changer as far as prospects of yesterday's run are concerned. Some will hope for the better and stay in, some will (well, already did obviously) shrug and exit... but the incentive for new longs with greedily glistening eyes to pile up in fear of missing the move surely disappeared. Will new one appear down the road? Why not, but that is going to be new game, new trade, new set of scenarios. As far as active trader is concerned, this one is over. New games come to town: JAZZ, SAY, ESLR...

Here is some of his bsi87 comments:

Max pain
Naw, I think I've mentioned it before. Works best around this time but I like to look at it. If the max pain figure is at or below current price, why mess with the stock? Plus I'm looking for 1 baggers (100% gain) to take on a long position.
Posted by: bsi87 at November 13, 2008 5:43 PM [link]
bsi,
please give me a quick tutorial here. in case of vmw, max pain for Jan 2009 = $40. ($22.77 today's close)
This is basically saying at $40, options writers lose the least for Jan expiry? and will do whatever possible to get it close to $40 as possibe?
And when using this tool, if you can find quality companies trading lower than their future max pain, it signals less resistance up to that max pain price, barring any unforseen news?
And lastly, who is the owner operator of that web site? how do they make money? and how do we know the source of all the options data is all legit.
thanks in advance.
Posted by: NYUgrad at November 13, 2008 5:50 PM [link]
re:VMW
I would look at the closest months first. Nov 22.5, Dec 20, Jan 40. VMW closed at 22.77 today.
The max pain point is where the maximum number/$ of puts and calls expire worthless. I don't know that the Jan figure is that accurate esp when Dec is showing 20.
I use RSI screens to identify potential buys/sells. If the max pain is not above my entry point, I just skip that stock. And with the markets as tough as they are, I've been looking for those issues with max pain at least 2X the current price. May not get there but more "gravitational pull".
I don't know who runs the site.
Suggest you google Max Pain options, there's a lot to read.
Posted by: bsi87 at November 13, 2008 6:10 PM [link]
4. A clear confirmation day (per W.J. O'Neil of IBD) with HUGE volume.

bsi87
Stan Weinstein used to use the weekly 10 DMA crossing the weekly 30 DMA as a long term confirmation, if my memory serves me correctly.
From a purely technical standpoint, I want to see volume come in to the upside; volume that will be so overwhelmingly large that it will be clear that the big money is comfortable coming back.
I'm OK with watching and waiting, as boring as it is.
Posted by: ToddinFL at November 12, 2008 12:13 PM [link]
going forward, i think we could all save a lot of time on investing by just going with longer term trends that i used over the past year in my 401k before stupidly trying to pick a bottom.
this is it:
1.) Buy the SPY when the S&P 500 goes at least 3% above it's 200 DMA.
2.) Sell the SPY when the S&P 500 goes at least 3% below it's 200 DMA.
in this current cycle, you would have sold in December and would not be buying until the S&P 500 goes back above it's 200 DMA.
this strategy works. test it out yourself. It's so easy to implement and helps you avoid massive downturns...
Posted by: teamonfuego at November 12, 2008 12:17 PM [link]

When I looking at the option stike price of a stock I see both the Volume and Open Interest. Exactly what does open interest mean. Does that indicate how many options have been written so far and have not been exericed or closed out for the specific strike price.

I notice that ther is a 154k open interest for October 14 puts while the open interest for October 14 calls is only at 30k. How would this effect max pain?

CP, what does your magic options calculator say on DELL? Thumbs up or a rude finger down?

Mackinaw,

in case of "normal stock, normal move" setup is enough for me. Meaning, if I see some of usual suspects moving in a way consistent with what they usually do in terms of current market, I just go with chart and setup. Good examples would be RIMM, AAPL, ADBE etc... if NASDAQ moves up and any of those does, I don't need any news.

Now, if I see an unusual move, yes, I want to have a look at news. No way I would touch that same RIMM for instance if NASDAQ goes up and RIMM dumps 3 points all of a sudden, without looking for news first. Or some of obscure stocks starts moving after being forgotten for months or years... or thing like JAZZ pops up suddenly... trip to a virtual newsstand first :)

Thanks, that all makes a lot of sense.

I can't help with the max pain stuff, but yes, open interest is the number of open contracts.

If the open interest is 0, and I sell a call, and you buy that call, the open interest is now 1, because there is an open contract. That contract can disappear if it is exercised, expires, or if it gets closed through a buy/sell kind of transaction.

I'll repeat advice I heard (and use) even though it may not be relevant to your comment: be wary of trading options with an open interest less than 100 times the position size you are planning on trading. If the open interest is too small, the market is illiquid, which is bad for prices (wide bid/ask spreads). While you can always exercise an option if that is profitable for you, an illiquid market makes it much harder to trade...and very few people hold options to expiration.

Released on 6/10/2009 1:00:00 PM For 6/10/2009 1:00:00 PM
Auction Results

Bid/Cover 2.62

Total Amount $19 B

Yield Awarded 3.990%

Les... yes. I am not aware of any free real time news feed that would match good paid one. Of course the need in it is totally timeframe dependent.

Trading and rocket science have nothing in common. As traders we have an easy task...see the market as it is, not as we 'think' it should behave.

The problem will always be controlling ourselves, holding onto the winners and dumping the losers. Floyd Upperman has a great summary of the qualities of the trader on his site:
http://upperman.com/

I gotta print it out and post it in my office.

I enjoyed his book, too.

Timeframe yes, I was thinking of your screener, of which I have a demo. Unfortunately insufficient capital to play. As the day gets close to when I have the magic "25", will look to paper trade training with your screener.

And it looks like the Fed bought $3.5B in longer term notes this morning (from NYFed POMO page):
Operation Date: 06/10/2009
Operation Type: Outright Coupon Purchase
Release Time: 10:14 AM
Close Time: 11:00 AM
Settlement Date: 06/11/2009
Maturity/Call Date Range: 08/15/2019 - 02/15/2026

Total Par Amt Accepted (mlns) : $3,500
Total Par Amt Submitted (mlns) : $10,979

The yield on the auction was 3.990% this morning with the Fed purchasing $3.5 billion of the $19 billion. That means the Fed had to buy 18.5% of the treasuries to keep the yield below 4%.

Just for comparison, last 10 year auction was May 6th, 2009.

Auction results: 3.19% yield

We already knew yield had been rising over the last month.

They need more paper for the printing presses over at the Fed.

actually one astronaut crew developed bronchiolitis obliterans from dinitrogen tetra-oxide inhalation on landing (IIRC)... that would be getting your lungs ripped off instead of the face...

Did Estes change the formula for their model rocket engines?

In laymans terms that means that there was total demand(even those asking for treasuries at 15% yield) for 2.62*$19B = $49.78 Billion of treasuries. Of that bidding $10.979 Billion was from the Fed. which means without the Fed bidding there was a bid of $38.801 billion. which would put the bid to cover at 2.042, which is MUCH lower than last month.

It basically means without the Fed's bid, the auction would have either ended with a yield much higher than current, or nearly failed. Excluding the Fed, there was only 50% more demand(at any yield) than there was supply.

Does any one have statistics on last months auctions, and the Fed's participation?

Here are the relavent links:

http://www.marketwatch.com/story/treasurys-down-ah...

http://www.newyorkfed.org/markets/pomo/display/ind...

http://www.treasurydirect.gov/instit/annceresult/p...

Anyone know why CEF is moving so much today?

Fits in well with option expiration don't it?

Thank you for your opinion on SQNM..

Today you definitely saved me from a fairly expensive stopout.

yet another lesson learned,

TLT down hard, USD up.
gold flat.

who says bonds crashing will be bullish for gold and bearish of USD????

Could it be that the 'money on the side lines' is moving from treasuries to cash? Just plain cash? That's all I can think of.

...

As the Dow dropped below 100 and the price petered out I took a small profit at 2.30

This is a lot of work:)

Getting ready to maybe get back in...AGEN also doing fabulously.

Waiting to reload for tomorrow's fun.

dr.cosa - "who says bonds crashing will be bullish for gold and bearish of USD????"

It depends on reason for bonds crashing. Today bonds didn't crash due to dollar depreciation, they crashed due to oversupply. Nobody came to play with Timmy today.

Can someone take a look at this:

http://www.newyorkfed.org/markets/pomo/display/ind...

That's the last 10 actions to purchase treasuries taken by the NY Fed. They've actually been buying up a lot of treasuries over the past week or two.

Can I get some help tallying up the numbers?

NYU

I am beginning to wonder whether using the 3 month avg volume is very appropriate considering that the past 3-9 months represented such an outlying event. Perhaps 1 or 2 year average volume would be more appropriate (although perhaps this is also skewed because of how much dilution has taken place in the market)?

Dave- I hope I'm not being to greedy, but the plan was to sell TBT after tomorrows auction...I'll stick with that.

Noticed alot of you on this site follow these etf's.
They both hit a double bottom in technical terms about a month ago
and seem to be moving sideways on above average volume.
Bill had mentioned with the price of oil at current levels how far behind could gas be?
Opinions,thanks
Gord

got back in about an hour ago at 31 cents just sold at 40

I got back in at 58.60 and 58.75.

I didn't know how far down things would go after my stop got hit. TBT does bounce around.

I suspect Something Interesting will happen tomorrow, based on what went down today. I'd be concerned holding gold in the early AM though, again based on today's action. They really hit it hard. Lets see, the recipe is - buy the buck, pound gold and silver, and equities get thrown under the bus just as a side effect.

The link is from the trenches of those dealing with consumers. The whole thing was a scam to protect WAMU from investigation of their own fake values, not the brokered loan.

NAMB (broker association) has called for a review:

https://www.namb.org/namb/HVCC_Resource_Center.asp

The scam here is that new code allows a bank to take your $450 up front and use their own in house 'valuation' without even calling a real appraiser out. How can that be protecting the consumer from their own naiive 'debt pergatory' ? We are hearing that some eager appraisers who got on the bus with an AMC early are being called to houses 80 miles from their turf so their findings are not based on knowledge of the area. The senior guys are having their prices cut drastically.

Home values in hard hit areas are being forced down by the bank's deciding what a home is worth (or they are willing to lend). We are just asking for a balanced view; not the banks in power mode. Enough of that already!

With the double bottom in tech terms about a month ago
and the sideway tracking on above average volume.
Bill had mentioned with the price of oil at current levels how far behind can gas be.
Curious if traders are looking long or short term
Thanks,
Gord

Microsoft Issues Record Number of Security Updates

Microsoft Corp. issued a record-breaking number of software security updates today, shipping patches that plug at least 31 different security flaws in its Windows operating systems and other software.

More than half of the security holes Microsoft plugged with June's patch batch earned a "critical," severity rating, meaning Redmond believes attackers could exploit the flaws to break into vulnerable systems without any help from the victims.

http://tinyurl.com/mkagzc

BillySundance, It really helps for consumers to speak up about their experiences. I have several couples trying to buy short sales and they can't even get an answer from the bank! One couple is renting a home that will be auctioned out from under them. They have made an offer with no answer in a bidding war and will be kicked out if a higher bid is made at the last minute. New laws are rolled out like tissue paper to cover the cracks on all these unintended consequences. The foreclosed rental tenant can stay to the end of their lease only if the new buyer is an investor (not intending to live there).

Don't get me going on the 'scam' of the First Time Buyer Tax Credit... FHA/HUD/IRS in a tangle about how to let the borrower have their tax credit up front but no, wait, HEY...can we make money by lending a second on that????? Hint: If you are buying a home with deficiencies that make it uninhabitable, there are foreclosure capital lenders who will fork it over for 90 days to get you in the door. Cheaper than a credit card at about 10-11% interest only. OR your crafty broker could sweet talk the heating specialist to do the work pending payment from closing proceeds by adding the bid cost to the sale price. (Imagine your banker facilitating that?)

Unfortunately there's application software that requires Windows features that aren't available on linux :-)

Yes that's really true. I have a trading platform that only runs on XP, yet I use a mac. So what I do, to limit the shenanigans that Windows viruses can cause, is run Vmware Fusion on my mac. Fusion lets you run a "virtual" copy of windows inside a mac window! It's awesome. That way, Windows cannot get out of its Fusion playpen, and I can use my mac for everything else I need to do. Works great, just requires some extra memory to make it run reasonably fast.

And if some virus infects my virtual windows machine, I can just revert back to an old (uninfected) snapshot and I'm back up in 2 minutes. Its the only way I'll do windows these days!

sold my remainder of spng at 13cents the other day. kicking myself sorta - but not really considering I was in at 3cents. Also got out of SQNM pre-market this am for a heck of a nice profit. In and out of FAZ today aswell...pretty good week for me. But alas - off to Niagara Falls tomorrow for the weekend so no trading until black Monday :) ...is that still in the cards?

Loannetter

Thanks for posting. I have read a number of your posts and appreciate your views from mortgage "trenches". I started looking at real estate a few months back as per my own analysis the cost of owning vs. renting (in my area) seemed to be moving to a more reasonable equilibrium. I also wanted to take advantage of the vast market for foreclosures and the first time $8000 credit.

Fast forward a couple months. I've learned volumes since I began. First off, the "bank owned" REO/foreclosure market operates much like the wild wild west. It is virtually impossible to get straight answers on anything from most of the listing agents these banks have hired. I think I need to take a college psychology class just to interpret most of the responses I've gotten from listing agents. There is also a large amount of bank owned property that is sitting unlisted, suggesting to me that there will continue to be new properties becoming available for some time.

Despite the recent jump in rates, I am still much more confident being on the buyers side and willing to wait until the situation is perfect (and if it never is I will continue to be a stress free renter). This housing market ain't reversing anytime soon (stabilization in 2010 would be best case scenario, I think) and I've already heard that Coldwell Banker is busy lobbying Congress on my behalf for a $15,000 first time homebuyer credit.

BillySundance, Thanks for your kind comments.

If you prefer speed, you might check out the HUD owned properties in your state. They are bid on electronically by a HUD approved broker and OUT the door they go. (Why not become a HUD approved broker methinks?) Lots of dogs there however. Avoid the wobbly boxes (manufactured homes)they are too hard and to $$ fund. FHA offers a $100 down program for their foreclosed homes with up to $5K to fixerup (only a few lenders fund them). VA.REO has a similar program for Veterans. I agree, this side of the transaction is better if you have the stamina--you'll win!

http://www.hud.gov/homes/index.cfm click on your state, then search by city.

The Fed Subpoena and BofA Testimony
June 10, 2009

Bob Eisenbeis is Cumberland’s Chief Monetary Economist. Prior to joining Cumberland Advisors he was the Executive Vice President and Director of Research at the Federal Reserve Bank of Atlanta. Bob is presently a member of the U.S. Shadow Financial Regulatory Committee and the Financial Economist Roundtable. His bio is found at www.cumber.com. He may be reached at Bob.Eisenbeis@cumber.com.

Yesterday, the House Oversight and Government Reform Committee subpoenaed Federal Reserve internal documents, notes, and emails in advance of the testimony by Bank of America’s Ken Lewis on Thursday. The hearing is on the alleged pressure applied by Secretary Paulson and Chairman Bernanke to go through with BofA’s acquisition of Merrill Lynch. Accounts of this pressure first surfaced in a letter to Congress and testimony released by New York State attorney general Andrew Cuomo. This subpoena may not seem like a big deal, especially since the Fed has indicated that it would supply the requested information, but it is for many reasons. But first, what is at issue?

Briefly, we can glean much from Attorney General Cuomo’s letter to the Congress, the SEC, and Congressional Oversight Panel. This much seems reasonably clear:

1. A few days after the BofA shareholder vote on Dec. 5, 2008, approving the acquisition of Merrill Lynch, the latter’s projected losses for the 4th quarter jumped by $3 billion and ultimately proved to be $6 billion.

2. The declining financial condition of Merrill was such that Mr. Lewis had essentially all but concluded that BofA should exercise what is called a “material adverse change” (MAC) clause in the merger agreement, allowing BofA to either abandon or possibly renegotiate the terms of the deal.

3. Mr. Lewis informed Secretary Paulson of his concerns, and between Dec. 17 and Dec. 22 a series of discussions took place between Mr. Lewis, Mr. Paulson, Chairman Bernanke, and other regulators. Policy makers made it clear that they were concerned about the systemic risk to the financial system and to BofA if the merger not go through, and apparently they strongly pressured Mr. Lewis not to invoke the MAC clause.

4. On Dec. 21 Secretary Paulson reportedly threatened that if BofA abandon the merger then its management and board might or could be replaced. According to the Cuomo letter, Mr. Paulson indicated that this communication was at the request of Chairman Bernanke.

5. On Dec. 22, at the bank’s board meeting, the views of the regulators were presented concerning systemic risk, the existence of the threat, and the willingness of the government to provide financial assistance to ensure that the transaction was completed. It was also indicated that the financial assistance could not be confirmed in writing. Other testimony indicated that if the commitment was put in writing, then the Treasury would have to disclose it, which the regulators did not want. In that meeting, the board also included a statement in its minutes that the existence of the threat did not influence its desire to proceed with the acquisition. (It is not unreasonable to think that this statement was a way for the board to provide itself some cover from liability).

6. On Dec. 30, at another BofA board meeting, further discussions with regulators about the commitment of financial support were considered, and Mr. Lewis made clear his view that were it not for the systemic risk issues, the MAC clause should be invoked. However, the commitment of government support to make BofA whole seemed, by inference from the board minutes, to be sufficient to put that problem aside.

This brief summary doesn’t do justice to the nature of the discussions already in the public domain among the regulators, the bank’s management, and its board. But it does suggest several issues that should be explored in the hearings in the interest of transparency, since taxpayer money was being used to encourage a merger that management was otherwise reluctant to pursue.

First, it is clear that policy makers’ actions and concerns meant that they were functioning as a de facto systemic-risk regulator, even though there was no explicit authority to do so. Second, in that capacity they knowingly committed taxpayer funds to make sure the merger went through, while not wishing to make that commitment known to either the general public or to BofA’s shareholders. That is, as the de facto systemic-risk regulator they were exercising regulatory discretion to downgrade the interests of BofA’s shareholders in favor of what they perceived to be the undefined, but potentially negative, consequences of “systemic risk.” In the process, the agency in charge of protecting shareholder interests – the SEC – was apparently not involved or informed in any way. Third, while both Secretary Paulson and Chairman Bernanke have steadfastly asserted that they did not specifically advise Mr. Lewis on what his responsibilities were regarding disclosures to shareholders, this seems based on the available information to be a distinction without a difference. It may be relevant from a legal perspective but not substantive as far as what was intended. The testimony by Mr. Lewis suggests there was a threat, a commitment of funds to ensure that the transaction took place, an expression of concern about public disclosure, and the granting of regulatory forbearance, which together raise significant questions about intent.

All of these issues will be explored tomorrow in greater depth, we hope. More important, however, is the lessons that will be drawn by Congress at it considers regulatory and agency reform and what powers and authorities to grant to the responsible agencies in a financial crisis. This case makes it clear that a crisis – and even non-crisis situation – can sometimes create conflicts among the interests of various affected parties or stakeholders, in this case the interests of the taxpayer, the financial system and real economy, and shareholders. In a paper with a former colleague at the Atlanta Fed, Larry Wall, we pointed out that when a regulatory agency is charged with multiple regulatory goals (such as monetary policy, banking supervision, and consumer protection) any conflicts that arise will be resolved internally to the agency, with the most weight given to the objective which it deems most important.1 This means that agencies with overlapping regulatory responsibilities – as in the case of banking regulation and supervision – will oftentimes resolve those goal conflicts differently. Hence, careful consideration should be given to deciding when the public interest is best served by having those conflicts externalized and when they can be resolved internally.

That is what is at root in the current discussion about the Merrill Lynch acquisition. Mr. Lewis and the BofA board were caught in the middle of a problem for which they potentially faced legal liabilities to shareholders for their actions and at the same time they must deal with the Fed and Treasury, who had other concerns.

Now, about the subpoena and the issues it raises. First, it says something about both the continuing Congressional complaints of lack of transparency on the part of the Fed when it comes to the recent responses it has taken to the financial crisis, and the erosion of the Fed’s reputation and credibility with Congress. That it should be forced, rather than acting voluntarily, to release information requested by Congress when there are less than compelling reasons for not releasing that information, sure looks like a power play between the Fed and Congress.

Second, such subpoenas are extremely rare, indeed. The last Congressional subpoena of the Fed was in 1990 when Congress subpoenaed the Fed to release examination reports on a foreign bank operating in the US, accused of channeling funds to Saddam Hussein. In that case, the documents in question were actually the property of several state bank regulators and not the Federal Reserve. The Fed was willing to release the documents, but state authorities used the courts to fight Congress’ right to obtain the documents from a secondary source. The subpoena did not involve a substantive issue concerning the Fed itself.

Third, in this case, most of the documents requested relate to communications between the Fed, Mr. Lewis, and the Treasury, pertaining to the Merrill acquisition and not examination reports. The Fed initially let the committee staff review the requested information on the Fed’s premises for several days. The reason for this restriction on distribution of the documents was that the documents supposedly included information that had been collected under conditions of confidentiality. Now, the committee has determined that it wants its members to have access to the documents. What substance is in those documents that require direct inspection by each Congressman and that could not be conveyed by their staff remains a mystery. It will hopefully be revealed tomorrow. Also unclear at this time is whether the treatment of such documents would or would not be subject to the same confidentiality agreements negotiated between Chairman Greenspan and Congressman Gonzalez in 1991, pursuant to its request of the Saddam Hussein financial records. Again, this looks like a power play between the Congress and the Fed rather than a substantive issue concerning regulatory reform, as discussed earlier. As such it is simply another indication of the willingness of Congress to press the Federal Reserve on its independence – issues that arise because of the Fed’s multiple regulatory roles.

1 http://www.frbatlanta.org/invoke.cfm?objectid=83FD...

Bob Eisenbeis, Chief Monetary Economist, email: bob.eisenbeis@cumber.com

Forget it. Obama has bought into the WS and HB&B weltenschau hook, line and sinker.

I've found that most programs that don't run on Linux aren't worth running. ;)

I think it's frustrating that my (Windows XP) work computer is only a few years old, but often runs slower than my 6-year-old (Linux) home computer with less than half the memory. Why does Outlook take 5-10 minutes to search a mailbox when my webmail does it in seconds? Why do I have to reboot after a while on Windows because programs can't seem to find memory anymore on a 4 GB system, even after I close everything?

It's amazing how frustrating Windows is once you get used to Linux.

For time immmemorial, nothin' new under the sun...huh, Casey...

Casey,

How's the weed out there?

Just kidding bro..You sound like a beautiful person.

I need to embrace the light, and let the waters take me home...

pretty much my friend,

its how we choose to make it our own , is the difference being just following the trends... or making one's life art itself.

Today the pump was in the futures instead of the close. And this sort of consolidation near the top is not such a great sign for bears. We may rally further.
tomorrow I will be looking at VVTV

anyone know what's on ESLR? It's up almost 30 % today. Sold some shares i bought at 1.80

I currently on my desktop and laptop run Ubuntu linux(with the full IB trader application). Most applications can run inside WINE(a windows emulator program) and those that can not run under wine will run under virtualbox with a full copy of windows xp installed.

If you have a newer machine(almost anything in the last 2 years) you might have the option for virtualization on the cpu. For anyone who tried VMWare over the last 5-7 years, the virtualization option on the cpu makes running a guest operating system just as fast as if it were the only OS installed(give or take 5% rather than what use to be about 70% overhead).

Sounds like a speculation...
i was burn quite badly during the last solar bull run...

ALOHA !!

I have been busy lately as I have to get some construction work done here before my contractor turns into a cop! Literally my GO TO construction dude is so fed up with the biz that he applied to the HILO POLICE ACADEMY and got in. He turns into "Mr. Brett ... SIR" on July 6th!!! I told him that next time he comes onto my property he better have a warrant!

Speaking of WARRANTS!

There are so MANY lies going on today around Wall Street and the US FED and the US TREASURY that you need a road map ... like when you visit Hollywood for the first time! A tour of the bottomless black hole money pits!

Let me start with GOLDMAN SACHS ... Lest we have all forgotten the only way you could qualify for TARP was to be a Bank Holding Company(BHC). Recall that investment banks like GOLDMAN SACHS and MORGAN STANLEY did not qualify, so they, voluntarily, and with a great deal of haste, changed to a BHC. I documented this using the "Bank Hierarchy Reports" on PEER GROUP ONE banks. There are no more investment banks with Peer Group One status in America. Suspicious behavior for banks who are solvent! So, I ask ... If all along Goldman Sachs and Morgan Stanley required no TARP then why did they hastily change their banking status to that of a BHC? They could have stayed as investment banks ... Imagine the great TV ads they could put out now ... GOLDMAN SACHS THE ONLY GREAT INVESTMENT BANK LEFT IN AMERICA ... WE SUCCEEDED WHERE ALL THE OTHERS FAILED! Not that the US FED or its member banks ever have to advertise. The MAFIA doesn't advertise ...

In this week's article of REVENUE BREAKDOWN I plan to have a link to the Linus Wilson analysis entitled THE GOLDMAN SACHS WARRANTS, where you will see that $5BIL is a lowball of all warrants for the ten banks and Wilson's estimate has a high end of $24BIL USD, but then that depends on how many shares the US TREASURY will renege on. So nothing is as it seems with TARP.

I also have some info on how the Congressional Budget Office(CBO)is trying to get "jiggy" with how the TARP outlays will be reported. More accounting magic that put ENRON out of business, yet HB&B and the US CONgress thrive on this sort of fraud! US TREASURY is a hot bed of accounting flaws with "jiggy" roads to nowhere!

Really ... please ... the only way to fix the system is to crash the system and it seems that is where our elected leaders are headed.

I am watching the US TREASURY for that $68BIL USD. Nothing on June 9th, except that someone heisted $33MIL USD from the US TAXPAYER on TARP and didn't repay a dime. So who took that $33MIL? WHO CARES ITS ONLY $33MIL!!!

Do not fall for the lies ... they are getting so fast and thick as soon as I hear or read something coming from these guys my first thought is WHERE'S THE BIG LIE HIDING? All they are doing is juggling lies in hopes that enough time will go by that the masses will have totally forgotten!

QUESTION AUTHORITY ...

David- If you haven't seen it, you can now rent it from NetFlix. I would avoid the bad reviews, as I think they're wrong. The best so far this year.

photogray, I did get some feedback and several referred to bsi87 for information in this area. Investing is a continual learning experience, but it can sure be frustrating. :) Thanks for the response, G

vinod- There's nothing wrong with being wrong. We're wrong at some point every day. So what?

There IS something wrong with not being able to admit we're wrong. That would be a serious obstacle to cutting losses quickly.

Like most people, I have a tendency to downplay my gains, whereas losses are taken more personally. It's human nature (at least mine), and it certainly doesn't help. Allowing myself to fully experience natural emotions while simultaneously leaving them out of the decision-making process is when I make my best moves. It's all mental.

They're putting a good team together, creating jobs and value, I wish them the best.

US Bond yields are most likely going to spike up tomorrow after reading this article.

http://www.asianews.it/index.php?l=en&art=15456&si...

"There IS something wrong with not being able to admit we're wrong. That would be a serious obstacle to cutting losses quickly."

Examples:
Nixon — Watergate
George III — No taxation without...
George W — WMD

Apologies to any Georges: Just coincidence, I'm sure:-)